What is a BOP Policy and Do I Need One?

For many small business owners, simplicity is invaluable. Running a business involves a myriad of responsibilities, and both delegating and keeping organized can be a struggle. The fewer things you have to juggle, the better. You don’t, however, want to skimp on quality.

With a business owners package policy, you don’t have to, at least not when it comes to insurance. What exactly is a BOP? It’s not just a catchy song you hear on FM radio. It stands for business owner’s policy and combines several different types of insurance coverage into one policy. Read on to learn more about what is covered by business owners' coverage, who is eligible for it, and whether it might be the right fit for your small business.

What is a Business Owner's Policy (BOP)?

Let’s start with the basics. What exactly is a business owner’s policy? A BOP is a package policy that typically bundles three types of insurance together. The three types of insurance are:

1. General liability insurance
2. Commercial property insurance
3. Business interruption insurance

Business owner’s policies are generally designed for small businesses. Whether or not your business is considered “small” in this case comes down to either the number of employees you have or your revenue. A BOP is primarily geared toward businesses with fewer than 100 employees or an annual revenue of less than $5 million, though not every small business meeting these criteria will be eligible.

To understand BOP coverage, it’s important to learn a little about the three types of insurance it includes. Let’s dive into general liability, commercial property, and business interruption.

General liability insurance.

A common commercial coverage option, general liability (GL), is a type of policy that can cover costs from incidents such as third-party property damage and bodily injury.

Because it’s such a workhorse, general liability is a handy type of coverage for just about any business. It can cover:

• Third-party bodily injury. This generally refers to nonemployees getting hurt as a result of your work. The payout could go to damages and medical expenses.
• Third-party property damage. This is typically damage your business has caused to property belonging to a client or other third-party.
• Personal and advertising injury. This includes things such as libel and slander.

General liability coverage isn’t required by federal law, but states, municipalities, and industry licensing boards may have their own requirements. Check your local guidelines to see what’s needed for your business.

Commercial property insurance.

For small businesses with valuable physical assets, commercial property insurance — also known as business property insurance — is useful to have. This type of policy can cover damage to a business’s property and assets under certain circumstances. These include but are not limited to:

• Fire
• Wind, storms, and snow
• Sprinkler leakage and various other forms of water damage
• Vandalism
• Building collapse

While it tends to cover a lot of weather-related and third-party claims, it usually does not cover:

• Theft or losses occurring off the business premises
• Vehicle damage
• Income loss due to business closure and loss relating to employee dishonesty
• Cyber fraud
• Damage resulting from earthquake or flood

You can add contents coverage, which may cover lost or stolen tools and equipment.

While commercial property insurance is not universally mandated, it may be required in your business property’s lease agreement. Check your contract to make sure you’re adequately covered.

Business interruption insurance.

Being forced to cease operations due to a natural disaster is more than just an inconvenience. It can be devastating to a small business’s profits and make it difficult to keep the business afloat.

That’s why business interruption insurance can be so important. Simply put, if a fire or other natural disaster were to cause a business to shutter for a period of time, this coverage may replace income lost as a result of the shutdown. In addition to lost income, business interruption insurance may cover:

• Temporary relocation
• Payroll
• Fixed costs such as operational expenses
• Loan payments and taxes
• Closure due to damage to a nearby business
• Training costs when new equipment is needed following a loss

As with business property insurance, business interruption typically won’t cover flood or earthquake damage. Utilities, pandemic, and other public health events, undocumented income, and broken items also will generally not be covered.

Who Should Consider a BOP?

Businesses are typically not required to carry BOP business insurance. However, BOP policy coverage can be a great option for small businesses.

Since it’s a package policy, it can provide coverage for many different types of damage (such as damage from arson) and financial loss (such as loss from shoplifting) . Even a small claim has the potential to set a small business back — having a wide range of coverage could help business owners avoid taking unnecessary financial hits. As a result, it can be a great way to keep multiple bases covered.

Business industries generally eligible for BOPs may include:

• Food service
• Retail, grocery, and convenience stores
• Wholesalers
• Property management
• Contractors

Reminder: While these industries are generally eligible for BOP insurance, eligibility will also depend on the number of employees and the business’s annual revenue.

Who is Not Eligible for a BOP?

It’s important to note that some industries are generally not eligible for business owner’s policies due to the unique risks they face. Some examples include:

• Financial institutions
• Theme parks
• Auto sales and repair
• Bars
• Manufacturers

What does a Business Owner’s Insurance Policy Cover?

Because a business owner’s policy packages general liability, business interruption, and commercial property insurance into one product, it typically covers claims falling under those respective insurance types. Let’s look at a few examples.

If a customer is injured after slipping and falling in your restaurant, the general liability portion of a BOP would likely be able to cover related medical costs.

If your business location has been vandalized, a BOP would typically be able to cover the damage, as it would be considered a business property claim.

If your small business is forced to close following a fire, this would likely be considered a business interruption and covered by your BOP.

Here for Your Business Insurance Needs

Simply Business® understands that insurance isn’t one-size-fits-all. Your small business isn’t like every other business — why should your business insurance treat it that way?

By offering a wide range of insurance options, Simply Business helps small business owners find commercial coverage as unique as the businesses themselves. With a convenient online quote tool that is available 24 hours a day, 7 days of the week, you can have a quote ready in just a few minutes. And there’s no shortage of choice. Simply Business offers:

• General liability
• Professional liability
• Workers’ compensation
• Cyber insurance
• Inland marine

Start your quote today to potentially find the right commercial insurance for your small business.

Your business may be small, but your insurance coverage doesn’t have to be.

Big Things Come in Small Packages

Because it packages three different types of insurance, getting a BOP insurance quote can be an efficient way to get a lot of coverage without juggling a bunch of separate policies.

While you may end up needing additional coverage, a BOP is a convenient powerhouse of insurance designed with small businesses in mind. By including coverage for a wide array of third-party and weather-related claims, a business owner’s policy is a versatile and customizable option for many types of businesses.

Your small business BOP doesn’t have to be complicated. We make it simple.